ISBN: 0674022289

Why has our society organized itself
so that company executives win whether
or not they do a good job?

If you're interested in this subject, you might enjoy reading [1].

It suggests several reasons, including:

* Many of the conventional mechanisms put in place to prevent this do not work. For example, the observed behaviour of boards does not resemble arms-length negotiation with executives over pay. "Independent" remuneration committees and external consultants likewise do not effectively represent shareholders' interests.

* Shareholders' voting power is very diffuse. If I own one billionth of Google via an index fund in my retirement savings, I ain't exactly got much leverage over them.

* Minority shareholder lawsuits and hostile takeovers are relatively powerless in the current age.

* The few large institutional shareholders don't seem inclined to do much about corporate governance. Some such as CalPERS have done things effectively in the past.

[1] https://www.amazon.com/Pay-Without-Performance-Unfulfilled-C...
[2] One example the book gives is a CEO whose pension terms were modified so that it the rate was based on his highest-paid year, with pay defined to include income he made from exercising stock options. A minor change that gave the executive an extra $20 million.

I actually have a couple of sources for this :). Apologies for the late reply, I also have a day job ;)

I would recommend Krugman's Conscience of a Liberal for an entertaining read. He referenced another book, aptly called Inequality[1], which I'm currently going through. Its a little more academic prose so its not something I can finish quickly (in short, its not an entertaining read...not that all books have to be of course).

Both of these books examine historical precedents for income inequality and attempt to analyze the current situation as well. I think they did a fair job, although I am open to change my mind if there is a better explanation. But these and other books, such as Dark Money[2], and just general news about the scummy activities of people like the Koch brothers have made me more convinced of this viewpoint.

Now to address your comment...

> Only a minority of companies in the US even have executives that get the much maligned high pay and bonuses in the last decade or so. What about the massive percentage of wealth that didn't fall into this category? They may have gain significantly from globalism but that was hardly the result of US tax policy alone.

This is most certainly not true [0]. From [0] and from Krugman's book, you can see just how much the changes in tax policy has incentivized ballooning executive pay and created a new class of executives, who may not be as rich as the landed/inherited, but are certainly "rich". And this class has grown and become more enriched due to globalism, the opening of foreign markets and plummeting of labor costs, both due to automation and cheap foreign labor. I almost think of it as a weird form of trickle down effect, where most of the wealth goes to the very rich but a little (relatively insignificant but in absolute terms very much so) trickles down to the executive class.

> Lets not forget that democrats were in power for the last 8yrs and the state has only grown exponentially since the 1990s under both republican and democrat governments. Just because tax rates weren't the extremes of pre-1980/1970s doesn't make them low. They've been relatively consistent while the middle class income dropped.

Yes Democrats were in power for 8 years but how many of their policies could not be enacted due to obstructionism? But lets not get into that area here: 8 years is a relatively small time to create/destroy inequality. And I don't see any Democrats pushing for tax cuts on the rich, especially cutting estate taxes, which affect only the very rich.

> The complexity of the tax code and lack of competitiveness with international countries may have heavily influenced inequality. But it was hardly the result of explicit tax reduction for the rich...

Its not the complexity of the tax code but its very nature. The top tax rate for personal income is around 35% in the US whereas it is much higher in other developed economies. And the sources that I've listed point to historical trends that prove the same point: once you have a class of super wealthy, they will inevitably influence the Government to reduce their tax burden no matter how that is achieved.

> The idea that tax havens are something that were merely a matter of weak policy is naive. Even worse than the drug war hawks.

I don't think that comparison achieves anything but hyperbole so I'm not going to comment on it.

> Just because the middle class didn't keep pace with the wealthy doesn't mean only the wealthy were at fault. The fact the middle class lost wealth is hardly singularly the fault of the wealthy. I know this narrative sells well in politics but it's very short sighted.

I think you're conflating wealth with income. The middle class, by their definition, is not wealthy (at least in the same country; middle class in US is most certainly more wealthy than in India, say). The US middle class hasn't lost wealth, its their incomes that have not been growing as fast as the incomes of the wealthy. Its unfortunately not just politics: investments in people reap great benefits for society. If a country fails to invest in the health and education of its citizenry because its unable to raise the revenue to do so by the wealthy, then its most certainly the fault of the rich.

> Even if the US adjusted tax policy to redistribute a larger chunk of taxes towards the middle class it would hardly make a dent in the new reality in the fact there is hardly a middle class economy like there used to be. So you must either develop a new middle class economy or you get temporary perks of taking it from the wealthy. This is the big whale in the room that the Bernie bro guys are ignoring. The likely scenario is that the wealthy would become continually less competitive over the years, shift way more money over seas, and the middle class would be in the same situation with a little bit more money for a short period.

I don't think that is likely. Sure its a changed reality now, and I certainly don't see what other future markets will open up, but this new reality demands a healthy, educated workforce to operate it. Income redistribution is less about taking from wealthy and giving it to the poor as much as taking from the wealthy and investing in institutions/programs that can assist the most vulnerable in society. More taxation by itself won't make the wealthy less competitive... I mean, how does that even happen? On the contrary: educating a kid from Inner City Detroit might give us the next Steve Jobs.

> Gov spending under any administration that enacts those policies would largely offset most of the gains going directly to the people regardless (which is good if it results in universal health care, but little else if it's not sustainable).

You seem to imply that all Govt. spending is wasteful which is most certainly not true. Surely its not perfect, but that's another problem that needs fixing.

Also, you asked for a source but failed to provide a single one for any of the many many assertions that you have made.

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